On 5 December 2023, President Marcos, Jr. signed into law Republic Act No. 11967, otherwise known as the “Internet Transactions Act of 2023.” This law aims to promote and maintain a robust electronic commerce (“e-commerce”) environment by building trust between online merchants and consumers. The Internet Transactions Act achieves this by providing a legal framework that describes and protects the rights of both online consumers and merchants.
Scope and Coverage
The Internet Transactions Act applies to all business-to-business (B2B) and business-to-consumer (B2C) internet transactions that are within the mandate of the Department of Trade and Industry (“DTI”). Internet transactions refer to the sale or lease of digital or non-digital goods and services over the internet.
Furthermore, the Act applies where one of the parties to the internet transaction is situated in the Philippines, or where the digital platform, e-retailer, or online merchant is availing of the Philippine market and has “minimum contacts” therein. This means that the Act has an extra-territorial application. The law states that any person who engages in e-commerce and avails of the Philippine market to the extent of establishing “minimum contacts” shall be subject to applicable Philippine laws and regulations.
The Act, however, does not apply to consumer-to-consumer (C2C) transactions. Neither does it apply to online media content.
E-Commerce Bureau
The Act also created the E-Commerce Bureau, a government agency under the DTI. The Bureau is charged with enforcing and implementing the policies set forth in the Act.
Notably, the Bureau is to establish an online business database. This database would contain the contact information of digital platforms, e-marketplaces, e-retailers, and online merchants engaged in e-commerce in the Philippines.
Authority of the DTI
The Act grants regulatory jurisdiction to the DTI as to the use of the internet for e-commerce by e-marketplaces, online merchants, e-retailers, digital platforms, and third-party platforms.
The Act also grants the DTI the power to issue summons, subpoena ad testifcandum, and subpoena duces tucem in connection with investigations or proceedings concerning violations of the Act. Failure to comply with the subpoena shall authorize the filing of a case for contempt.
Notably, the Act grants to the DTI the power to issue takedown orders. These orders may be issued ex parte after investigation or verification by the DTI Secretary. A takedown order directs the removal of a listing or offer on a webpage, website, platform, or application, regardless of intended nature of the transaction, when the transactions violate the provisions of the Act. This includes the sale or lease of goods or services which are prohibited or regulated, sale or lease of goods subject of a cease and desist order, and other transactions purporting to sell or lease goods or services that otherwise threaten public or personal safety, or compromises financial or personal information.
The violating entity subject to the takedown order shall be given the opportunity to be heard within 48 hours of the issuance of the order. The maximum period of the takedown order is 30 days, unless it is extended or made permanent by a judicial order or decision.
Rights, Obligations, and Liabilities of Parties in Internet Transactions
The Internet Transactions Act provides for certain obligations that online consumers, e-marketplaces, digital platforms, e-retailers, and online merchants must observe. All these parties of an internet transaction must observe ordinary diligence in internet transactions.
Where the transaction includes delivery of purchased goods, online consumers shall not cancel confirmed orders already paid. This also applies where perishable goods are in the possession of a third-party delivery service, or when the goods are already otherwise in transit. There are exceptions to this, such as when a cancellation fee has been paid by the consumer, or when the parties otherwise agree.
In case of defective or malfunctioning goods, or when the goods are lost due to no fault of the consumer, or when the goods fail to conform with the warranties of the online merchant or e-retailer arising from a contract, the online consumer may pursue remedies. These include repair, replacement, refund, or other remedies under the Consumer Act of the Philippines. Where the remedy is that of refund, the online merchant is entitled to the return of the goods delivered without cost to the consumer. If the goods cannot be returned due to the fault of the online consumer, the cost for the goods is to be reimbursed to the online merchant or e-retailer.
E-marketplaces must ensure that internet transactions are clearly identifiable as e-commerce transactions. E-marketplaces must also identify the person or persons on whose behalf the transactions are made. Further, promotional offers and the conditions to qualify for the same must be accessible, clear, and unambiguous.
E-marketplaces shall also require all online merchants to submit certain information, such as valid government IDs or business registration documents, contact details, geographic addresses. E-marketplaces shall also prohibit the sale of regulated goods, unless the necessary permits and license information are provided. Furthermore, e-marketplaces must require merchants to clearly indicate the information about their goods and services, such as the price, description, and condition.
The same obligations apply to other digital platforms that do not retain oversight over the consummation of the internet transaction, such as social media platforms. For such platforms, the contact information of online merchants must be clearly indicated.
E-marketplaces and digital platforms must take the necessary precautions to protect the data privacy of consumers under the Digital Privacy Act. Moreover, they must provide effective and responsive redress mechanisms for both online consumers and online merchants.
E-retailers and online merchants must ensure that the price of goods and services are indicated, consistent with the Consumer Act. Moreover, the goods received by the online consumer must be of the same condition, type, quantity, and quality as described and stated in the online posting. The goods shall also be delivered together with accessories and other packaging, and must possess the qualities that are standard and normal in goods of the same type which the consumer may expect given the nature of the goods and the public statements or testimonials made by or on behalf of the e-retailer, merchant, or other persons in earlier links of the chain of transactions.
E-retailers and online merchants must also publish information on their homepage, such as the corporate and trade or business name, contact details, and the address of the physical shop or place of business. These must also be submitted to the E-Commerce Bureau.
If you’re a covered entity and seek to get a more detailed understanding of the law, please do not hesitate to contact our office at support@aaqlaw.com.ph. You may also access a copy of the law through this link.
